The synthetic ammonia market is currently stabilizing at a low level, and the low shipping atmosphere is improving
2023/12/6
With the short-term significant tightening of local market supply and the stabilization of low-priced regional markets, the market atmosphere is once again anxious. Some trade and terminal entry enthusiasm has increased, and there are also expectations of bottoming out. At present, in the market, there is still a bullish and bearish atmosphere, especially considering that some companies are experiencing short-term failures and new production capacity is relatively smooth. The local supply tightening situation will gradually ease, but the planned maintenance and port consolidation expectations of gas companies may still have some support for the market. Therefore, both positive and negative factors in the market exist, and the game continues to operate.
The supply side of the main production area continues to be abundant, and market pressure still exists
As of December 5th, the amount of commodity ammonia in the main production area reached 24800 tons, which is still a relatively large supply since 2023. Moreover, as can be seen from the graph, the recent trend of the ammonia market is similar to that of March this year, which is also a significant decrease in the market after a significant increase in commodity ammonia. However, in March, international ammonia prices also began to decline significantly, and the entry of imported ammonia accelerated the market's decline. Currently, although there are signs of decline in the international ammonia market, there has not been a significant decline. However, in the near future, the production of ammonia in the main production area will still be dominated by sufficient operation. Although the recovery of the Jinying unit has been delayed until the end of the month due to renovation, some short-term faulty enterprises have mostly recovered one after another, the Xuyang unit in Cangzhou is also recovering, and qualified products from Shenma have been produced. Therefore, the short-term supply will still be relatively abundant.
However, the maintenance of gas head enterprises in Southwest China will boost the market, and the price of urea, a co produced product, is more evident. Although the market has been affected by export restrictions recently and has shown a circuitous tactic, the price has risen after being low and attracting orders. However, due to the recent decline of Nissan to 175000 tons, the market has rebounded again and the market has significantly increased. Of course, this is closely related to the upcoming maintenance status of gas head enterprises. Some gas companies in Sichuan, Henan, and Qinghai are expected to stop production in the early part of the month, while gas companies in Xinjiang, Yunnan, and Inner Mongolia may stop production in the next 10 days. It is expected that daily production will drop to around 160000 tons in the middle and late stages of the month. In contrast, it is also a favorable signal for the ammonia market. Gas head enterprises are mostly co producing, and ammonia shutdown plans are also synchronized. According to the previous data, the estimated reduction is about 1300 tons/day. Therefore, the shutdown of gas head enterprises will have a certain alleviating effect on the supply of goods in central and northwest China.
Good Gathering Port
Since the decline of ammonia prices in China and the continuous high rise of international ammonia prices, domestic ammonia prices have continued to be inverted compared to imported ammonia prices. In the past half month, domestic ammonia prices have declined by 600-700 yuan/ton, while international ammonia prices have only declined by around $20. As of recently, the price of CFR in China has reached 570 US dollars, with an average domestic price of 3587 yuan/ton. The domestic price is inverted by the import price of 1200 yuan/ton, so there is currently no expectation for imports. However, if there is a significant and rapid decline in international ammonia prices in March this year, there may still be a possibility of imports. However, even though China currently has a certain advantage in ammonia production, based on last year's upside down rate, the probability of an upside down rate exceeding the export window of 2000 yuan/ton may be higher, let alone limited international spot demand.
However, there is still some demand for domestic cargo terminals, and the short-term expectation of relying on foreign ammonia is relatively small. Therefore, the demand for domestic port collection in the future may still play a certain supporting role in the market. However, due to market sensitivity, the date of arrival at the port is currently unclear, but there may be hope after mid month.
There are both positive and negative factors in the ammonia market, and the game is being played
The synthetic ammonia market is currently stabilizing at a low level, and the atmosphere for low level shipments has also significantly improved. However, the atmosphere is still cautious. Although the northern region has taken advantage of short-term volume reduction to drive an improvement in the shipping atmosphere, and some market operators have also entered the market in a stable situation during the market stage, which is also beneficial for the digestion of some order sources. However, some faulty enterprises have recovered one after another, and more new production capacity has been released as scheduled. The market supply is still abundant, and at the same time, the maintenance effect of gas head enterprises and the appropriate arrival of gathering ports will present a game situation in the market. After the digestion of local speculative gains, there will be some declines, and the future market support will depend on the degree to which the gains are realized.
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